Tax & Legal

The European Court of Justice (ECJ) decided that the service provided by a taxable person, which consists in purchasing accommodation from other taxable persons and reselling them, in its own name, to other business operators, is covered by the special value added tax scheme applicable to travel agents, even though those services are not accompanied by ancillary services.

The Supreme Tax Court has followed an ECJ ruling and held that a travel agent granting customers a discount at his own expense cannot deduct the cost from his taxable turnover (his agent’s commission).

The finance ministry has decreed that charges by travel agents to airlines for promoting their services are subject to VAT as sales promotion.

The ECJ has held that a travel agent selling package tours and exempt services on behalf of operators cannot deduct the discount given to customers (travellers) at its own expense from its turnover chargeable to VAT.